Homebuyer’s9 Reality Checks

For New BuyerBefore you get to gaga

over a potential new home

Purchasing with Profit

in MindThink there’s a

landlord in you?

Get SmartThe Best InvestmentsFor Your New Home

Guide

A Home that is Just RightHere’s how to strikea balance

First-Time

September 27, 2012

Reality Checks for New Buyers with Big Dreams

9Before you get too gaga over a potential new home, take off the rose-colored glasses and keep these points in mindby Lindsey RomainCTW FEATURES

It’s easy to get swept away in the romance of

a new home – those tall ceil-ings, that spacious backyard, all the great amenities that are nearby. Eager young buyers are especially vulnerable. The mindful first-time home buyer will keep an eye on the little practicalities that many first-timers ignore. Here are nine points to keep in mind before buying your first dream home.

1 THE HOUSE IS DRESSED

TO IMPRESS Sellers spruce up a

house before putting it on the mar-ket, staging it with attractive furni-ture and accessories, baking cookies and lighting candles to scent the rooms with a pleasant aroma. What seems like a nice detail could be covering up a problem, such as stinky plumbing or musty odors.

“Go back to the house at anoth-er time and request that there be no olfactory or auditory enhance-ments,” says Suzanne Whang, for-mer host of HGTV’s “House Hunters” and author of “Suzanne Whang’s Guide to Happy Home Buying” (HGTV, 2006).

Diana Brodman Summers, an attorney and author of “How to Buy Your First Home” (Sphinx Publishing, 2005) adds: “Concen-trate on the facts, not the fluff.”

2 EMPTY ROOMS FEEL

BIGGER During a walk-

through, think about your own possessions and how they will fill the space. Ignore the furnishings that are there – or not there.

“If the house is empty, remem-ber that furniture will make each room feel smaller,” Whang says.

3 KEEP TRACK

OF THE APPLIANCES

Make sure the con-tract honors the appliances that will come with the house. And make sure it’s specific.

“Do not just say ‘washer and dryer,’” says Brodman Summers. “Say ‘Maytag Model 800 washer and dryer.’ That way the seller can-not substitute an old washer and dryer for the one in place when the deal was made.”

Brodman Summers advises doing a walk-through of the home the night before closing to ensure that all items in the contract are still there and in the same condition.

4YOU’RE GOING TO HAVE TO FIX STUFF

New homes rarely arrive in pristine condition. Be sure

to allot some of your budget for repairs, big and small. A pre-pur-chase home inspection will offer insight into what projects might need to be done, and your agent will highlight potential fixes, too.

5THE HOUSE WILL LOOK DIFFERENT THROUGHOUT

THE DAY

Visit the house and surrounding area at different times during the day and at night.

“You’ll want to experience the levels of sunlight and shade in all of the rooms,” says Whang, who also suggests walking around the neighborhood at different times to see how safe you feel.

6 ARE THE

NEIGHBORS

HAPPY?

The best way to know if a neighborhood lives up to the asking price of a property is to get a feel from the folks who live nearby. Chat up neighbors to see if they’re comfortable with the area and have had good experiences. It’s a good idea to meet people in the area and in your building; you’ll want to be sure you’ll be comfort-able living next door to them .

7GOOD SCHOOL D I S T R I C T S COME WITH A PRICE

Have kids? Want kids? A strong school district might influence a purchasing decision, but be aware that a good school means a higher price tag. What makes a school dis-trict “good?”

“A person may want to research the school district online,” suggests Brodman Summers. “See if it has made the news; look at the demo-graphics of the families in that area; look at school board meeting min-utes and the graduation rate.”

8YOUR MONTHLY COSTS MAY GO UP

According to Brodman Sum-mers, the monthly mortgage cost on a home is often is higher than a new homeowner expects, due to insur-ance and taxes, which have the potential to increase. She suggests making a detailed budget and stay-ing conscious of the fact that certain expenses will fluctuate.

9 A LITTLE COURTESY GOES A LONG WAY

“If you really love a house, write a personal letter to the owners,” says Whang. “It could make the difference between your offer and a comparable dollar amount from another buyer.”

Whang notes that many sellers don’t want to sell a family home to buyers who will tear it down or make major renovations, so if your plan is to keep the integrity of the structure, let them know. A little bit of home loving can go a long way to making the best decision.© CTW Features

LOOKING INTO BEING A LANDLORD? No longer can

home buyers count on purchasing now and selling for a profit later.

Instead, buyers wanting to wring cash out of a home are eyeing an immediate payoff: rental income.

The foreclosure crisis has scared off or prevented thousands of fam-ilies from owning a home. But the lure of a nice home and yard endures: Data firm Local Market Monitor reports that 15 percent of single-family homes are for rent, up from 13.2 percent in 2005.

More folks looking to rent prompts more people to consider becoming landlords. “Investors of all types approached us to ‘teach’ them on how to become a successful real estate investor,” says Jim McClel-land, president of MACK Compa-nies in Tinley Park, Ill., which purchases rentals for investors.

“Being a landlord is more like running a small business than it is like investing in stocks,“ says G. Scott Haislet, a Lafayette, Calif., an accoun-tant who owns rental properties.

“With a stock, you spend some time before investing doing research, but then you don’t have to do much but watch it,” he explains.

“Even if you use a management company, you’re going to spend time being a landlord ... the manage-ment company will call to ask if you want to make certain repairs, for instance.”

Here, a primer on rental basics:THE BAR RISES FOR INVESTOR BORROWERS

Don’t dream about collecting rent unless you already have healthy cash reserves. Seeking a mortgage for a property you intend to rent typically requires a 25-percent down payment, explains Brian Siebert, past president of the Michigan Mortgage Profes-sionals Association.

Lenders also may want six months of mortgage payments in reserve when the purchase is closed.

Property insurers view rentals as riskier, so expect to pay about a 25 percent more for coverage than on a traditional homeowner’s policy, says

Chris Hackett of the Property Casu-alty Insurers Association of Ameri-ca.THE PROPERTY DICTATES PROFITS

Selecting the right property isn’t as much a personal decision as a business analysis: What are the com-

parable rents? How about vacancy rates?

While would-be landlords may be drawn to the many attractively priced single-family homes, a house may not be the best choice, says Robert Boyer of the website Finest-Expert.com, which scores specific

addresses for their investment potential. A duplex might rent each side for $700, while a single-family home of the same square footage of both duplexes could rent for just $1,200, he says. “It’s easier to rent multi-family units because the rent charges are cheaper.”TAXING MATTERS ARISE

If landlords didn’t realize they were getting into a business, they will when they file their income

taxes. You’ll probably be filing Form 1040 Schedule E, Haislet says, whereby you can take a host of deductions to minimize taxable rental income.

Knowing all the possible deduc-tions, such as depreciation on the building structure, and backing them up with records is something that “people who do it themselves get wrong a lot,” Haislet says.© CTW Features

Parkview Estates, Waverly• Established quiet, friendlyneighborhood

• Affordable Prices

• City Water & Sewer

• Adjacent to Park, Playgroundand Soccer Field

•Close to WSR Schools

RESIDENTIALBUILDING LOTSFOR SALE

IN NORTH WEST

WAVERLY

Also available:Willow Lawn Addition & Park Meadows Condos

CALL NOW352-4286

www.ramker.com

Crushed Stone,Sand & Gravel

101 BMC Drive,Elk Run Heights, Iowa 50707

Phone (319) 235-6583Fax (319) 235-7065

www.bmcaggregates.com

• Crushed stone for your driveway!• Landscaping rock for your beds!• Sand for under your pool!

BMC AGGREGATEShas all your

landscaping product needs!

Limestone

WashedRiver Gravel

Flagstone

Call Craig Today(319) 553-1457

Are you fearful ofbuilding a new home?

Never fear get the best pricepossible on your new homeGuaranteed! Ask how?

Let us take the worry out of theprocess. Experience Matters

Our newest new home planfully finished 2400 at $99per sf.

• Free Customization

• $5,000 in Free Upgrades

• Top materials and suppliers

www.CraigFairbanksHomes.com

LOW PRICEGUARANTEE

Purchasing with a Profit in MindThe demand for single-family home rentals is risingby Marilyn Kennedy MeliaCTW FEATURES

WO-062412049

Built with the finest materials and in a maturesetting for those who appreciate the best.

Rick Young(319) 290-3476

3836 Trent Lane, Waterloo

Enjoy carefree condoliving with all of the

amenities on one floor.

Finest condoin the

Cedar Valley

Luxury Condos

SOMEWHERE BETWEEN THE closing table and the housewarm-ing party, reality sits in: You have a lot of space to fill and decorate. Oh, and all those repairs the landlord used to handle are now your respon-sibility.

The average new homebuyer spends about $4,900 on appliances, furniture and remodeling in the first year, according to the National Association of Home Builders.

The general rule is that you should spend no more than 30 per-cent of your gross (pre-tax) income on housing. That will leave you some wiggle room for the other stuff.

If you’re like most first-time buyers, you may not have much in the way of savings after the down payment, so spend wisely the first couple years of ownership to get the most bang for your buck.

Here, real estate agent Drew Scott and his licensed-contractor twin brother Jonathan Scott, stars of the HGTV show “Property Brothers,” offer their tips on where to prioritize your purchases.

THINGS THAT LOOK COOLEveryone knows that kitchens and bathrooms move homes at resale,

so if you want to remodel a bit, you might want to start there.

“There are countless ways to update your kitchen and bathroom, no matter how low of a budget you’re working with,” Drew says. “Modern and new doesn’ t mean everything needs to be customized. You can make a [prefabricated] kitchen look custom-designed by mixing it up. Save by getting pre-fabricated cabinets so you can pair them with custom features like a stone countertop, under -mount lighting and crown molding.”

In the bathroom, two of the easi-est ways to modernize are by updat-ing the vanity and flooring, Drew adds. Because most bathrooms are small, getting great-quality, stylish tiles may be more feasible. You can find sales on 16-inch porcelain tiles for as little as $1.25 each.

“For all your renovation prod-ucts, take time to shop,” Drew says. “I’ve found an impressive dual-ves-sel sink vanity with dark wood cabinetry – all assembled – for less than $800.”

If your budget is extremely lim-ited and you’re not looking to change the layout, simply add new hardware to your cabinetry and paint or re-stain your cabinets, Jon-athan says.

The Best Investments for Your New Home

Get Smart

Drew and Jonathan Scott, twin brothers, home pros and stars of the HGTV series ‘Property Brothers,’ offer insight into where to prioritize dollars in a new homeby Courtenay EdelhartCTW FEATURES

Drew Scott, left, and twin brother Jonathan, right, stars of HGTV's ‘Property Brothers’

WHEN HE TOOK ONE LOOK AT THE old Chicago brownstone

home that was for sale, Bill Rancic, knew it was for him.

“Its location was unbelievable, right in the heart of the Gold Coast Historic District,” says Rancic, the Chicago real estate developer who became a household name after win-ning the first season of Donald Trump’s “The Apprentice.”

One would expect a 100-year-old home to have its own set of charms, but it’s what the home did not have that really sold Rancic.

“What I loved was that the inside was completely stripped,” he says. “It was like a blank canvas. I really enjoyed that. I put my heart and soul into [remodeling] and have sleepless nights thinking of what I’m going to do.”

You can call Bill Rancic a home-builder or a flipper, but he’ll quickly correct you. He doesn’t buy the homes with an intention to sell. Instead, he calls himself an artist. What painters do with a blank can-vas, Rancic does with a home.

“I never remodel homes with the intent of selling them,” he says. “I do it because I enjoy it, it’s a creative out-let for me and I get satisfaction from taking something that’s horrible and making it gorgeous, in my opinion.”

Once he’s purchased a home, Rancic says he makes sure to pay attention to the care and detail he puts into it, something all buyers can do with their new homes.

“I’m big into embracing technol-ogy and its advancements,” says Ran-cic, who is married to E! News anchor Giuliana Rancic. “In our last home, we had 12 cameras and equip-ment that turned on all the lights and the heat and unlocked the doors from my iPad 7,000 miles away.

“The [homes] have a traditional

quality, too, and I like incorporating the old and the new and infusing them together,” he says.

Rancic, who built a “cigar scotch” room in one of his homes, also sug-gests creating an environment you can see yourself in.

“I can see myself at a dinner table or with a great bar and room, but you have to have something that has mass appeal to the general population, depending on who you’re trying to appeal to,” he says. “I built that room as a great place to entertain and it wouldn’t cost you a for-tune to take it out, unlike, for example, a bowling alley.”

Despite the buying, remodeling, selling and more buying, Rancic doesn’t consider himself some sor of marketing guru. “I’m not out market-ing my homes because I built them with the genuine intention of living there. I like to buy things I’m going to

hold onto, including apartment build-ings and rental property. I really don’t consider myself a flipper.”

Next on his building agenda, he’s starting construction on a mixed-use building lot in downtown Chicago. He offers these tips to those who are still trying to sell their homes in today’s market: “Offer something unique and lead with your greatest assets,” he says.

“Remember that first impressions matter,” Rancic says. “I looked at a condo for Giuliana and I, but it was filthy with crayon on the wall. It was a high-end unit. This person could’ve spent $5,000 on cleaning it up and gotten several hundred thou-sand dollars more. It’s like selling a car and not spending $10 on a car wash. You want the ‘wow’ factor.”

© CTW Features

“Changing your faucets and fix-tures can instantly update the look,” he said. “Installing a new lighting fixture in the bathroom can make a big difference in a small space. These improvements breathe new life into your kitchen and bath-rooms at a low cost.”

THINGS THAT SAVE MONEY

Don’t blow your budget on a design piece or renovation that the average person won’t find value in, Jona-than said. For example, a Jacuzzi or pool sounds luxurious and adds value, but usually not enough to cover the cost, and it could deter buyers who don’t want to deal with the maintenance and safety issues. An affordable way to add value is to knock down a wall between a kitch-en and family room, says Jonathan, noting the bulk of buyers who pre-fer an open-layout plan.

“A common mistake we see with do-it-yourself projects is when a homeowner attempts to improve a space by renovating without removing walls, when the original layout was simply not functional,” Drew says. “While you have a rede-signed kitchen, the function of the space has not changed and buyers will still see the kitchen as cramped and impractical.”

If a wall is load-bearing, you can install a beam or can cut out a walk-through, which opens up the space without compromising structural integrity.

Another wise investment is any-

thing that promotes ener gy effi-ciency, such as a tankless hot-water system, solar panels or high R-value insulation.

“These will cost a bit more up front, but there are usually rebates that you can apply for to offset any additional expenses,” Jonathan says. “Generally, the additional costs may take three to five years to recoup, but you’ll definitely be sav-ing money in the long run.”

To learn more about energy-effi-cient upgrades and potential rebates or tax incentives, visit EnergyStar.gov.

THINGS THAT SAVE TIME

It’s common for homeowners to feel obligated to work with the first contractor or designer they find. Don’t hire anyone until you’ve interviewed several candidates, and remember that cheapest is not always best.

Ask friends and family members for referrals, Jonathan says. The Better Business Bureau is another great source for ensuring that a firm is legitimate and has a good track record.

Most professionals should pro-vide a free quote and be sure to get it in writing. Find out if they’re licensed, how long they’ve been in business, make sure they are up to date on the latest codes and tech-nology, ask about their educational background and always check ref-erences, Jonathan says.

© CTW Features

YOUCOULDBEHOMERIGHTNOW!

DEB HOVEY

319-610-1337

Let me help you findyour perfect home!

319 61

Buying with Bill Rancic‘The Apprentice’ star and real estate developer opens up by Lisa IannucciCTW FEATURES

ThaT firsT home To finally call your own has

been on your mind for years. But unless money is no object – and it probably is – you’ll have to leave some things off the wish list.

A first home is not necessarily a dream home, says Geraldine San-tiago, author of “The Complete Home Buyer’s Guide for Canadi-ans” (Self Counsel Press, 2003). “If [buyers are] setting themselves up for something that has all the bells and whistles, they’re going to be disappointed,” she says.

Still, all homebuyers can find a place that’s just right, as long as they balance expectations with reality. Take these steps to make sure you’re prepared.

Size it UpSo how much space will you

need? The answer is different for everyone, but most experts predict smaller homes in the future. The average home size reached its peak in 2007, at 2,521 square feet, according to the U.S. Census Bureau, shrinking to 2,392 square

feet in 2010. By 2015, it will be 2,152 square feet, according to the National Association of Home Builders. So don’t be afraid to go for less space. Think about practi-cality and expenses. Ask yourself,

“Can I afford the heat and air con-ditioning? Calculate all that in,” says Bette McTamney, president-elect of the Pennsylvania Associa-tion of Realtors.

Make a CheCkliStMcTamney asks her clients for

their various “lists”: a must-have list, a want-but-could-live-with-out-it list, and a list of things they really don’t want, she says. Come up with your checklist before meeting with an agent. Santiago suggests going to open houses on your own to see what you like. This is especially important for couples. You and your partner should be on the same page to avoid conflict while house hunting.

prioritizeOnce you make your list, decide

what items are more important. Maybe you need three bedrooms, but there are only two bedroom homes available near your desired school district, says McTamney. “If good school districts is higher on your list, you need to be able to say, ‘Can we make that den work into a third bedroom?’”

ConSider the fUtUreWill you live in this house for three

years? Ten years? Your whole life?

These are questions you need to ask yourself, says Michael Wolf, author of “The First Time Home Buyer Book” (Dog Ear Publishing, 2010).

Manage yoUr tiMeWolf says the average buyer

looks at anywhere between 10 and 15 homes over a 30-day span. But don’t let statistics guide you. “There’s nothing wrong with want-ing to buy the first house that you see,” Wolf says. If there are things you absolutely cannot compromise, it could take longer. “If you’re in a

position to wait, then wait,” McT-amney says. But Wolf warns against analysis paralysis – looking at more than a hundred homes.

keep yoUr eMotionS in CheCk

It’s your first house. It’s excit-ing, and it’s emotional. But don’t let those emotions take over. “Don’t lose track of that logical thought process,” Wolf says.

© CtW features

GETLISTED

GETSOLD

Mike Taylor • 239-3659

Less“To Do“and alittle for you!

* Subject tocredit approval.Minimum $25,000 loan,new money only. Automaticpayment from an SBT/SSBaccount required to qualify for $100gift. Gift will be deposited at the timeof closing. Offer ends 10/05/12.

Right now, whenyou close on a qualifying

Home Equity Line of Credit,

we’ll deposit

$100into your account

with us. *

See an EXPERTtoday!

reality check! it’s easy to get frus-trated in looking for the perfect home. here’s how to strike a balanceby dana MolinaCtW featUreS

A Home That’s ‘Just Right’

Here’s my cardLet One Of These Real Estate Professionals

Assist You When Buying Or Selling

WE CAN HELP! Capital Gains legally forgiven on the sale of your REor business investment without utilizing a 1031 Exchange. Give us acall, we can show you how to sell your farm, stocks or business even toa family member. Our Wealth Preservation formula has the capability ofreducing or eliminating the inheritance tax. Works for personal,S-Corp or C-Corp ownership. We work with your CPA.

319.239.3333Bruce@BruceWingert.comwww.BruceWingert.com

3006 Rownd StreetCedar Falls, lowa 50613Fax: 319.277.3122

Want to sell your investment butconcerned about Capital Gains ??

Call me at 319-239-3333& I’ll connect you w/ one of my team members for an appt & details.

After you become a homeown-er, it’s time to develop a bud-get. Don’t forget that there’s more to keep in mind than monthly mortgage payments.

MaintenanceNow that you own the home,

there’s no landlord to fix things. Whether you hire a plumber, electrician or need materials for DIY projects, these costs can add up, says Santiago.Annual cost: 1 to 3 percent of

the purchase price, according to SmartMoney.org.

UtilitiesAsk the sellers how much they

pay each month, poll neighbors or call the utility company and ask how much the previous owners paid.Annual cost: According to

Kiplinger’s, expect 10 percent of monthly take-home pay to go toward utilities.

TaxesTaxes fluctuate, McTamney

says, so before you buy, call the school districts and the township to find out if they’re expecting a tax hike.

Home WarrantyThis is an extra – similar to

the extended warranty you buy

for electronics, says Cindy DiCianni, co-author of “How to Make Your Realtor Get You the Best Deal” (Gabriel Publications, 2004). It’ll generally last one year and cover things like plumbing, electrical issues, and appliances.

© CTW Features

The Cost of Ownership

A FIRST-TIME HOMEBUYER USUALLY has a big-item

checklist: a master bathroom; no obnoxious colored tile in the kitchen; a back porch big enough for a Jacuzzi, perhaps.

Beyond these quantifiable items, though, there are aspects of choosing a home that take more time and effort to check out. Follow these tips to make sure you find the perfect home for all your wants and needs.

START THE PROCESS WITH A SOLID AGENT

The most important decision a first-time buyer makes is to choose an agent “who constantly works to meet your expectations,” says Mike Wolf, a San Diego-based real estate agent and author of “The First Time Homebuyer Book” (Dog Ear Publishing, 2010).

A good agent will outline the highlights and the lowlights of a property, never leaving out infor-mation that could make a pur-chaser think twice. Buying a new home is a big deal, so having good help along the journey is essen-tial.

A SOLID FOUNDATION COUNTS

Wolf says to be mindful of four major attributes of a home that you may not immediately notice: the foundation, plumbing, electrical work and roof. Rely on

professionals to red flag potential problems.

“Don’t try to pretend like you know what you’re talking about because you read a few articles online,” Wolf says. “Let your real estate agent get you linked to people who deal with these things every single day.”

DOUBLE-CHECK THE NEIGHBORHOOD

The house may look good, but how is the ’hood? Even safe neighborhoods have fallbacks. Check out the neighborhood more than once and at different times of the day.

Katherine Ross, director of coaching at Corcoran Consulting & Coaching, a Swansea, Ill. real estate broker consulting compa-ny, suggests asking yourself ques-tions like, “Is there garbage on the street?” or “How do the yards look?” She also says to be mind-ful of the amount of street park-ing, which can indicate the level of commotion, and be on the lookout for future projects like building and construction that might intervene with your move.

“A home’s value is based on location and condition,” says Ross. “You can change the condi-tion, but you cannot change the location.”

Wolf says to make it a mission to meet the neighbors and ask them questions about the neigh-

borhood. “There are going to be people

coming and going, parking their cars, walking their dogs,” he says. Get to know them, find out more about the area and the mainte-nance of the neighborhood. Is it clean? Is it safe? Are the rates good?

“That gets you the best, most honest answers,” he says.

CAN YOU WALK IT?

In 2011, the median age of a first-time homebuyer was 31, according to the National Asso-ciation of Realtors. Many first-time homebuyers are young, and young couples are more apt to search for a home that supports green and healthy living. That can mean anything from solar panel roofs to energy-efficient lighting and insulation. But the biggest energy saver is one many might not consider: being carless.

Walking instead of driving not

only cuts energy usage, but it also saves a homeowner money and contributes to a healthier, active daily routine.

Matt Lerner is CEO of WalkS-core, a website that promotes walkable neighborhoods by rank-ing cities and towns based on how easy it is to reach amenities and services on foot versus using automotive transportation, among other pedestrian-friendly measures. According to Lerner, three-fourths of prospective homebuyers aim to buy a home that will help shorten their com-mute.

House hunters can enter an address on WalkScore to deter-mine a neighbohood’s walkability. The higher the WalkScore, the more walkable it is. Scores are determined by the distance between homes in a neighbor-hood to places of importance: the grocery store, the post office, school, work. These points help

assess both the distance of the commute and the dollars saved. Lerner says that one point on WalkScore is equal to $3,000 sav-ings on gas and related vehicle costs.

“A walkable home is a green home,” says Lerner. “You’ll be healthier, it’s better for the envi-ronment and your home is going to be a better investment.”

KEEP AMENITIES IN MIND

A quick, easily walkable trip to the supermarket is great, but remember that proximity comes with a price.

“The amount of amenities and the proximity of them to a specific house is highly correlated with price,” Wolf says. “You defi-nitely get what you pay for in real estate. If living centrally is impor-tant to you, be prepared to pay a premium in order to do so.”

© CTW Features

Beyond the Kitchen SinkA homebuyer buys a house – and buys into a new world. Here’s how to scout the intangibles that are part of a purchaseby Lindsey RomainCTW FEATURES